ROWLAND SEEKS SPEEDY BUDGET FIX

CHRISTOPHER KEATING; Courant Staff WriterTHE HARTFORD COURANT

Saying the election season is over, Gov. John G. Rowland vowed Friday to call legislators into a special session in December if a compromise can't be reached by the end of the month to close the state's projected $400 million budget deficit.

To close that gap, legislators will start negotiations Tuesday, and Rowland intends to meet with employee unions next week to discuss possible concessions. Looking ahead, Rowland said the state is also facing an additional $1.5 billion projected deficit during the next two years because of shortfalls in tax revenue caused by the sluggish economy.

"I look back over the last 10 years, and this is probably the most important time ever to begin governing immediately" after an election, Rowland told reporters at the Capitol. "Everyone that got elected [for the state legislature] knew for the last six months that we had a deficit. They knew we had to do something about it immediately."

Rowland also announced Friday that he had canceled the traditional Inaugural Ball at the State Armory in Hartford and will instead hold an open house at his Capitol suite after he is sworn in for a third term.

"During a period of time when the state is experiencing a flat economy, it is inappropriate to hold an expensive ball that is attended by a relatively small number of people," he said, referring to the lavish, black-tie affairs attended every four years by lobbyists, legislators and politicians.

When asked by reporters if the deficit can be closed without tax increases, Rowland responded that it could have been possible if Republicans had gained control of the legislature. Democrats, however, will hold a 94-57 edge in the state House of Representatives, and a 21-15 edge in the state Senate, when the legislature convenes in early January.

"I was bold enough during the campaign to say if you vote for more Democrats, you will get more taxes -- and that's their first order of business," Rowland said Friday. "I told them pointedly if we don't have a budget agreement by the end of this month -- everybody knows the rules, everybody knows what's at stake here -- there will be a special session."

Rowland's statements about a session before Christmas caught some top legislators off guard, only minutes after they had concluded their own press conference on the deficit. House Speaker Moira Lyons and Senate President Pro Tem Kevin B. Sullivan had spoken at length about their initial budget meeting Friday with Rowland, and they told reporters that they expected to resolve the issue when the regular session starts in January.

"There was never a discussion of a November deadline," said Brooke Baran, a spokeswoman for Sullivan, the leader of the Senate Democrats. "[Sullivan] believes the governor is mistaken."

Before the meeting with Rowland, Senate Democrats reiterated their support for the "millionaire's tax" that Rowland vetoed earlier this year. The new Senate majority leader, Sen. Martin Looney of New Haven, is a chief proponent of the tax. If the tax on individuals earning more than $1 million annually is increased to 5.5 percent from the current 4.5 percent, the rate would still be lower than the rate in many other states, he said. The increased rate would not be "onerous or uncompetitive," Looney said.

Although the increase would be 1 percentage point, the marginal rate increase on the amount of money earned over $1 million would be 22 percent.

One of the key factors in closing the deficit could be whether the state employees agree to givebacks or concessions. Rowland has sought a meeting with the unions, but no date has been set.

Attorney Daniel Livingston, the chief negotiator for the state-employee bargaining coalition, said the employees decided earlier this year that they would not give concessions if the governor was not willing to impose the additional tax on millionaires.

"We continue to be disinclined to be part of a program like that," Livingston said Friday. "Maybe the governor has come to his senses. ... I'm not sure what the governor wants to talk about. They didn't give us details. It's fairly obvious that he's not going to give us a gift."

Brian Anderson, a spokesman for AFSCME Council 4, which represents state employees, said that givebacks and concessions are essentially the same as taking money out of the pockets of state employees, including those earning $30,000 or $40,000 a year.

"The governor refuses to tax millionaires, but he is willing to have a special tax for lower- and middle-income state employees" through givebacks, Anderson said.

House Republican leader Robert Ward said the millionaire's tax had already been decided by the voters in the governor's race, which he said was a referendum on whether to increase the tax.

Rowland's "opponent in the election said it was the answer to all the problems in the state, and he lost the election overwhelmingly," Ward said of Democrat Bill Curry.

Senate Republican leader Louis DeLuca, one of the legislature's staunchest opponents of tax increases, surprised reporters when he said that tax increases might have to be part of the package to close the continuing deficits.

"I don't think we can do it all in cuts," DeLuca said. "I don't think we can."